Global investment bank Jefferies claims Bitcoin (BTC) is a hedge against currency devaluation and rising inflation.
At press time, the price of Bitcoin is around $27,961.
Jefferies, a leading global investment bank, advises long-term investors, particularly pension funds, to invest 10% of their portfolios in US dollar-denominated Bitcoin.
The bank emphasizes the importance of viewing investments in Bitcoin and gold as insurance measures and not as short-term transactions.
They stressed that attempts to tighten monetary conditions will face lengthy delays in this economic cycle, attributing this to the significant increase in the money supply since 2020.
Christopher Wood, global head of equity strategy at Jefferies, raises concerns about the ability of G7 central banks, including the Federal Reserve, to smoothly transition away from unconventional monetary policy.
He believes these central banks are likely to maintain their commitment to expanding their balance sheets in a variety of ways, underscoring the need for strategic investment decisions given the evolving economic landscape.
Jefferies highlighted Bitcoin’s role as an inflation hedge, noting that investors had largely overlooked fears of a U.S. recession. Nevertheless, current economic indicators continue to point to an impending economic downturn.
The narrative of Bitcoin as a safeguard against financial system instability gained further traction earlier this year following the US banking crisis
Several institutions, including Signature Bank, Silicon Valley Bank and First Republic Bank, faced major challenges earlier this year as customers, lacking confidence in their stability, withdrew their funds in a panic.
Grayscale Victory Raises Hope for Bitcoin ETFs
The Securities and Exchange Commission (SEC) has yet to greenlight a spot Bitcoin exchange traded fund (ETF), an investment vehicle that allows investors to gain exposure to Bitcoin without owning the actual cryptocurrency.
A recent court ruling in favor of Grayscale Investments, manager of the world’s largest crypto fund, has paved the way for potential Bitcoin ETFs.
This ruling requires the SEC to review Grayscale’s application, although the agency retains the option to appeal the court’s decision. A spot Bitcoin ETF, if approved, would trade on traditional exchanges, with Bitcoin custody managed by a brokerage firm.
The SEC has consistently rejected spot Bitcoin ETF applications, raising concerns that the applicants have not demonstrated sufficient investor protection against market manipulation.
Still, cryptocurrency enthusiasts believe that the approval of a spot Bitcoin ETF could pave the way for wider institutional adoption. Such an ETF would simplify access to assets and allow investors to buy and sell digital currencies more easily through brokerage accounts.
Steven Schoenfeld, CEO of Market Vector Indexes, recently expressed optimism that the SEC will approve multiple Bitcoin ETF applications at the same time.
He explained that these approvals could come sooner than he originally expected.
On September 26, members of the House Financial Services Committee wrote a letter to SEC Chairman Gary Gensler urging the SEC to move forward with approving ETF applications. However, they mentioned that they plan to discuss the matter with him at an upcoming hearing.
Cathie Wood, CEO of influential innovation investor ARK Invest, also expressed new optimism about the possible approval of a Bitcoin spot ETF in the US
Wood explained that the chances of such a decision would increase. Wood’s comments coincide with ongoing efforts by various companies, including established firms such as Fidelity and BlackRock, to launch a Bitcoin ETF in the US
This trend reflects a growing interest in providing investors with easier access to cryptocurrencies.
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